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Hahn v. Triumph Partnerships

United States Court of Appeals, Seventh Circuit
Feb 12, 2009
557 F.3d 755 (7th Cir. 2009)

Summary

holding that a debt collector need not itemize principal and interest

Summary of this case from Calogero v. Shows, Cali & Walsh, LLP

Opinion

No. 08-1521.

Decided March 4, 2009.

Argued February 12, 2009.

Appeal from the United States District Court for the Northern District of Illinois, Frederick J.

Daniel A. Edelman (argued), Edelman, Combs Latturner, Chicago, IL, for Plaintiff-Appellant.

Joseph S. Messer (argued), Messer Stilp, Chicago, IL, for Defendants-Appellees.

Before EASTERBROOK, Chief Judge, and FLAUM and MANION, Circuit Judges.


Triumph Partnerships bought some overdue credit card debts from HSBC Bank USA. One of Triumph's affiliates sent Marylou Hahn a letter saying that she owed $1,134.55. According to the letter, $1,051.91 of this was an "AMOUNT DUE" and the remaining $82.64 was "INTEREST DUE". The letter told Hahn that she should pay Triumph rather than HSBC Bank and that the total of $1,134.55 was "inclusive of interest accrued in accordance with the terms of your original agreement." The letter also offered to accept $567.27 in satisfaction of the debt. (We refer to Triumph Partnerships and its affiliate collectively as "Triumph.")

Hahn does not deny owing $1,134.55. Instead of paying, however, she filed this suit under the Fair Debt Collection Practices Act. Hahn relies on 15 U.S.C. § 1692e, which says that "[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." In particular, § 1692e(2)(A) provides, a debt collector may not falsely represent "the character, amount, or legal status of any debt". According to Hahn's complaint, Triumph misrepresented the "character" of her debt when it said that the interest due was $82.64. Hahn maintains, and Triumph concedes, that the $82.64 represents interest accrued after it purchased the debt from HSBC. The $1,051.91 includes interest that accrued while HSBC was Hahn's creditor. Thus the representation that "interest due" equals $82.64 was false, Hahn submits. The district court, however, granted summary judgment in Triumph's favor, ruling that the letter's statement is true.

Hahn owes more than $82.64 in interest. But the proposition that $82.64 of the total is "interest due" is true. Hahn reads the statement "interest due" as if it were "this is all the interest due". Equivalently, Hahn could argue that "amount due" should be read as if it were "principal due". The letter's actual language, however, does not commit either of these errors. An "amount" that is due can include principal, interest, penalties, attorneys' fees, and other components. Interest then can be added to that total. (Hahn does not say that her agreement with HSBC Bank for-bade compound interest.) And we know from Wahl v. Midland Credit Management, Inc., 556 F.3d 643 (7th Cir. 2009), that there would be no falsity even if the "amount due" had been described as "principal due" — for Wahl observes that when interest is compounded, today's interest becomes tomorrow's principal, so all pastdue amounts accurately may be described as "principal due".

Barnes v. Advanced Call Center Technologies, LLC, 493 F.3d 838 (7th Cir. 2007), holds that a debt collector need not break out principal and interest; it is enough to tell the debtor the bottom line. So Triumph could have sent Hahn a letter demanding payment of $1,134.55 without saying where this figure came from. By providing some extra detail Triumph may have helped customers understand the situation. The "amount due" reflected the last balance they would have seen in mailings from HSBC. Lumping together the interest charged while HSBC owned the account, plus interest after the sale to Triumph, would have produced "amount" and "interest" items that did not correspond to any figures that Hahn or other customers would have recognized. Reporting the post-transfer interest separately also could have helped debtors to check whether Triumph had applied the correct interest rate to the balances acquired from HSBC. Classifying obligations in a way that helps customers to understand what has happened cannot be condemned as a false statement about a debt's character. (It is not evident what § 1692e(2)(A) means by the "character" of a debt. We need not pin down the definition, because the letter is true.)

Hahn does not contend that the "interest due" line item is misleading. To get anywhere with such an argument she would need to introduce survey evidence, or some equivalent, demonstrating how the language actually affects borrowers. See Williams v. OSI Educational Services, Inc., 505 F.3d 675, 678 (7th Cir. 2007); Johnson v. Revenue Management Corp., 169 F.3d 1057 (7th Cir. 1999). Her only argument is that the letter is false — and, as we have concluded that the statement is true, the case is over.

The statement's immateriality is another way to reach the same conclusion. Suppose Triumph had written: "Remember the tan-colored letter you received from HSBC giving your balance as $1,051.91? From now on you will receive light blue letters from us, and interest will be added to the balance due." Hahn seems to think that she could collect statutory damages if HSBC's letters had been gray rather than tan in color. As we recognized in Barnes, the difference between principal and interest is no more important to the Fair Debt Collection Practices Act than the color of the paper that HSBC used. A dollar due is a dollar due. Applying an incorrect rate of interest would lead to a real injury; reporting interest in one line item rather than another (or in two line items) harms no one and, for the reasons we have given, may well assist some people. Materiality is an ordinary element of any federal claim based on a false or misleading statement. See Carter v. United States, 530 U.S. 255, 120 S.Ct. 2159, 147 L.Ed.2d 203 (2000); Neder v. United States, 527 U.S. 1, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999).

We do not see any reason why materiality should not equally be required in an action based on § 1692e. The statute is designed to provide information that helps consumers to choose intelligently, and by definition immaterial information neither contributes to that objective (if the statement is correct) nor undermines it (if the statement is incorrect). See Peters v. General Service Bureau, Inc., 277 F.3d 1051, 1056 (8th Cir. 2002); cf. Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769, 776-77 (7th Cir. 2007). This is the upshot of our conclusion in Wahl 556 F.3d 643, 646, 2007 WL 3071678, *2-3 that, "[i]f a statement would not mislead the unsophisticated consumer, it does not violate the [Act] — even if it is false in some technical sense." A statement cannot mislead unless it is material, so a false but non-material statement is not actionable.

Our conclusion that the letter does not violate § 1692e makes it unnecessary to decide whether Triumph Partnerships — as opposed to its affiliate, which sent the letter — is a "debt collector."

AFFIRMED


Summaries of

Hahn v. Triumph Partnerships

United States Court of Appeals, Seventh Circuit
Feb 12, 2009
557 F.3d 755 (7th Cir. 2009)

holding that a debt collector need not itemize principal and interest

Summary of this case from Calogero v. Shows, Cali & Walsh, LLP

holding that “a false but nonmaterial statement is not actionable” under the FDCPA because “ statement cannot mislead unless it is material”

Summary of this case from Okyere v. Palisades Collection, LLC

holding that "a statement cannot mislead unless it is material, so a false but nonmaterial statement is not actionable" under the FDCPA

Summary of this case from Ellswick v. Quantum3 Grp., LLC (In re Ellswick)

finding that, "[m]ateriality is an ordinary element of any federal claim based on a false or misleading statement"

Summary of this case from Magee v. Portfolio Recovery Assocs., LLC

finding that the plaintiff did not satisfy the materiality requirement under section 1692ebased on debt collection letter that mislabeled the amount of principal and interest, noting that “ dollar due is a dollar due. Applying an incorrect rate of interest would lead to a real injury; reporting interest in one line item rather than another (or in two line items) harms no one.”

Summary of this case from Wilson v. Trott Law, P.C.

finding that "a false but non-material statement is not actionable" because it is "not likely to mislead the least sophisticated consumer"

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finding that, in the context of 1692e, "if a statement would not mislead the unsophisticated consumer, it does not violate the Act-even if it is false in some technical sense"

Summary of this case from Young v. G.L.A. Collection Co.

affirming summary judgment for the defendants where the alleged falsehood was immaterial and therefore could not be misleading

Summary of this case from Ruth v. Triumph Partnerships

affirming summary judgment where plaintiff unable to establish deception or materiality

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In Hahn v. Triumph Partnerships LLC, 557 F.3d 755 (7th Cir. 2009), the Seventh Circuit addressed whether a materiality standard applies to § 1692e.

Summary of this case from Hill v. Accounts Receivable Servs., LLC

stating "a debt collector need not break out principal and interest . . . [s]o [the debt collector] could have sent [the debtor] a letter demanding payment of $1,134.55 without saying where this figure came from"

Summary of this case from Jones v. Midland Funding

In Hahn, the Seventh Circuit concluded that a false or misleading statement is not actionable under § 1692e unless it is material, observing that "[m]ateriality is an ordinary element of any federal claim based on a false or misleading statement."

Summary of this case from Lembach v. Bierman

In Hahn v. Triumph Partnerships LLC, 557 F.3d 755 (7th Cir. 2009), Chief Judge Easterbrook concluded for a panel of the Seventh Circuit that a false or misleading statement is not actionable under § 1692e unless it is material.

Summary of this case from Donohue v. Quick Collect

In Hahn, a demand letter stated that Marylou Hahn owed $1,134.55, of which $1,051.91 was the "amount due" and of which $82.64 was "interest due." Id. at 756.

Summary of this case from Donohue v. Quick Collect

In Hahn, the Seventh Circuit concluded that mislabeling a sum "interest" when it included only part of the interest owed, and mislabeling a sum "amount due" when it included both principal and interest, was not a materially false characterization of the debt.

Summary of this case from Donohue v. Quick Collect

In Hahn, in which the Seventh Circuit held that a collection letter need not itemize principal and interest, the court also held that the interest statement in question – which included only post-assignment interest in the portion of the debt labeled "interest," but included both pre-assignment interest and principal in the portion labeled "amount due" – was immaterial because "the difference between principal and interest is no more important to the Fair Debt Collection Practices Act than the color of the paper that [a collector] used [for its collection letters].

Summary of this case from Calogero v. Shows, Cali & Walsh, LLP

In Hahn, the plaintiff argued that a debt collector had violated the FDCPA by including interest that accrued when the debt was owed by the original creditor in the statement of "amount due" and not as "interest."

Summary of this case from Arcila v. Portfolio Recovery Assocs.

In Hahn, where a collection letter itemized the amount owed, the court found that while a collection letter need only provide the amount due, such an itemization might be helpful to consumers.

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noting that an example of an immaterial statement under the FDCPA might be if a debt collector said that a debtor received a tan-colored letter but in fact he received a gray one

Summary of this case from Wheeler v. Midland Funding LLC

stating that because plaintiff's "only argument is that the letter is false—and, as we have concluded that the statement is true, the case is over"

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In Hahn, the plaintiff alleged a violation of § 1692e because she received a letter saying that she owed $1,134.55, and according to the letter, $1,051.91 of this amount was an "AMOUNT DUE" and the remaining $82.64" was "INTEREST DUE.

Summary of this case from Wilder v. Credit Control Co.

In Hahn v. Triumph Partnerships, 557 F.3d 755, 756-57 (7th Cir. 2009), the Seventh Circuit noted that the amount due could include interest that accrued after the collection agency purchased the debt.

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In Hahn, the plaintiff argued that the debt collector had to separate principal and interest, but the Seventh Circuit disagreed.

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explaining plaintiff "does not contend that the "interest due" line item was misleading. . . . Her only argument is that the letter is false — and, as we have concluded that the statement is true, the case is over."

Summary of this case from Heffington v. Gordon, Aylworth & Tami, P.C.

In Hahn, the court found that a debt collector need not break out principal and interest; it is enough to tell the debtor the bottom line. 557 F.3d at 757.

Summary of this case from Spuhler v. State Collection Servs., Inc.
Case details for

Hahn v. Triumph Partnerships

Case Details

Full title:Marylou HAHN, Plaintiff-Appellant, v. TRIUMPH PARTNERSHIPS LLC and Allied…

Court:United States Court of Appeals, Seventh Circuit

Date published: Feb 12, 2009

Citations

557 F.3d 755 (7th Cir. 2009)

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